European Courts of Justice to reveal Woolworths and Ethel Austin redundancy decision tomorrow - but what does it mean for businesses?

 
Catherine Neilan
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Woolworths: The case could have huge implications for British businesses (Source: Getty)

Note: This story was written before the opinion was published. Go here to find out what the advocate general said.

Tomorrow could bring about the reversal of a ruling over redundancy consultation and compensation that costs companies millions of pounds.

It's a huge deal and could have major implications for businesses throughout the EU. But what exactly is happening and why?

What is happening

The ECJ is considering whether UK employers have to go through a consultation period when 20 or more redundancies are being proposed at one establishment within a 90-day period, and also whether those members of staff should be given a pay-off.

Why?

The matter dates back nearly seven years.
It seemed inconceivable when it happened, but back in 2008 Woolworths – which had been a permanent fixture on the Great British high street for a century – entered administration, resulting in the redundancies of thousands of people up and down the country.
Two years later Ethel Austin succumbed to the same fate.
At the time, thousands of staff were told they did not qualify for compensation because they worked in smaller shops, deemed under the Trade Union and Labour Relations (Consolidation) Act 1992 to be “at one establishment”.
But the union Usdaw took the matter to the Employment Appeal Tribunal, where it was agreed that the phrase “at one establishment” should be disregarded in instances where redundancy affects 20 or more people.
Compensation totalling millions of pounds was paid out, but the matter was taken to the Court of Appeal, then the Court of Justice of the European Union. Tomorrow will be the turn of the advocate general to lay out guidance, which is invariably followed by the Court.

What does all that mean?

If the advocate general decides that the Employment Appeal Tribunal, which granted the compensation, was wrong, it could have huge implications for businesses and staff alike.
Omer Simjee, an employment partner at national law firm Irwin Mitchell, summed it up by saying:
“UK businesses will be keeping their fingers crossed as the impact of these decisions has made large scale redundancies more expensive and complicated as they’ve had to employ all affected employees across a number of sites for longer due to redundancies not being possible until the consultation period has been completed.”

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